Zelenskyy Is Losing Trust in His Central Banker Over IMF Ties

Andrii Pyshnyi Photographer: Andrew Kravchenko/Bloomberg Photo by Andrew Kravchenko /Bloomberg

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(Bloomberg) — Ukrainian President Volodymyr Zelenskyy is increasingly unhappy with central bank Governor Andrii Pyshnyi, viewing him as being too close to the International Monetary Fund and not doing enough to support the wartime economy, according to people familiar with the situation.

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The IMF has irritated Zelenskyy with demands for a series of unpopular conditions in return for loans to support Kyiv, the people said, asking not to be identified because the issue is sensitive. Pyshnyi’s perceived rapport with the Washington-based lender has become a focus of the president’s discontent, they said.

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Zelenskyy doesn’t plan to remove Pyshnyi, at least for now, the people said. He also doesn’t see strong candidates to replace a governor who’s led the National Bank of Ukraine for the bulk of the war with Russia, they said.

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Presidential spokesman Serhiy Nikiforov declined to comment. IMF spokesperson Camila Perez declined to comment.

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“The questions you raised were not discussed — either in terms of their direct substance or the implications they carry,” the central bank said in a statement to Bloomberg News. “Throughout the four years of the full-scale war, the NBU has demonstrated its effectiveness across each of its mandates: ensuring price stability, maintaining a stable foreign-exchange market and strong confidence in the national currency, safeguarding financial stability, and ensuring the uninterrupted functioning of the banking system.”

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Several senior officials who have access to Zelenskyy expressed concern that the bank under Pyshnyi’s leadership has done too little to support an economy under strain by maintaining a tight monetary policy.

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The central bank said in its statement that lending has been expanding rapidly and that the current period of credit growth “is the longest and most dynamic in the past 17 years.”

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The rift threatens to expose how politics is encroaching on central bank independence in a war that’s testing Ukraine’s military capabilities, economic resilience and delicate constitution.

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The IMF disbursed nearly $700 million last month in the latest tranche of its four-year lending program to support Ukraine’s economy and budget. The central bank estimates total direct budget support from international partners this year could reach about $54 billion, enough to cover the deficit.

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Tensions between Zelenskyy and the IMF started to rise last winter after the lender approved an $8.1 billion loan program for Ukraine that required key commitments from the government. They included tax hikes that drew sharp criticism from Ukrainian lawmakers and many ordinary citizens.

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Zelenskyy was angered by the concessions to Ukraine’s second largest donor after the European Union, and blamed several senior officials including Finance Minister Serhiy Marchenko and former Deputy Prime Minister Taras Kachka, the people said. Kachka was removed from his post in last month’s cabinet reshuffle.